The U.S. Central “Wind Down” - Why It Happened, What It Means

Corporate credit unions scrambled to put into place responses to NCUA’s announcement Thursday that it had failed to find a buyer for conserved corporate U.S. Central Bridge’s ACH, Apex and related payments lines of business and would instead “wind down” those operations.

That decision by the regulator triggered the big question: how did this happen? A source with significant familiarity with the U.S. Central operations told Credit Union Times: “What U.S. Central had was not economically viable. Its services were priced out of the market.”

He predicted that perhaps after a transition that ought to proceed smoothly for well-prepared corporates, corporates will in fact find they are getting the same – or better – services at lower prices. “I see this as good news for corporates. Nobody will be left high and dry.”

A wild card is how long the NCUA will continue to operate the bridge. The agency’s not saying, but belief is widespread that present customers of U.S. Central will have ample time to find a new payments provider.

Some corporates have already done exactly that, according to statements received by Credit Union Times.

At Texas-based Catalyst – which itself recently won the right to buy Western Bridge – vice president Amy Fuller wrote in an email: “Catalyst Corporate has already identified replacements for each of the U.S. Central Bridge Corporate services that we use. This research was completed early this year as a contingency, and it is detailed in our business plan. Due to Catalyst Corporate’s scale and in-house expertise, we can operate independently from the aggregation historically provided by U.S. Central. For example, we have long offered our own in-house ACH program, though we have supported the U.S. Central APEX program as well.”

Corporate One vice president Paul Hixon provided a statement to members of that Columbus, Ohio, corporate that read in part, “Corporate One has been formulating available options should operations be discontinued at U.S. Central. Our plans have included narrowing a field of candidates and performing stringent due diligence on those organizations.

“We are focused on choosing partners that will provide reliable, secure and competitive services to our members, while causing minimal disruption to your staff and your own members. While we have yet to be advised when the transition away from U.S. Central’s services will occur, we are confident we will be ready to provide these services without interruption to our members.”

In Nashville, Tenn. Volunteer Corporate Credit Union senior vice president Sandy Swofford said her institution had already plotted its next steps. “We have completed our due diligence and risk assessment and have chosen [Wichita, Kan.-based] Lending Tools to be our ACH provider. VolCorp will be converting to the product early next year, and will be converting our members later in the year.”

NAFCU, meantime, said that credit unions deserve more information about NCUA’s plans with U.S. Central than the regulator has provided. NAFCU CEO Fred Becker said in a statement: “U.S. Central Bridge Corporate FCU’s role in regard to providing payment services and in respect to the Central Liquidity Facility touches every credit union in the country. Therefore, NCUA has a duty to quickly provide more details on the decision to unwind U.S. Central’s services. The agency must be as transparent as possible as it moves forward with its plans. NAFCU has sent a Freedom of Information Act request to NCUA in order to facilitate that transparency on behalf of the industry and we look forward to an expeditious response.”